Technology
The Slowdown in Venture Capital Deals is a Cause for Concern
Last year, the market for venture capital soared to new heights. A record amount of money was raised, with global funding for VC-backed companies reaching $128.5 billion, a 44% jump from 2014.
However, this impressive annual data doesn’t show the whole picture. The fact of the matter is that the flow of venture capital deals peaked mid-year, and then began to disintegrate in the autumn.
Here’s another look, this time with quarterly data from CB Insights:
The data for Q4 is a steep drop off in terms of deal-flow, and this number hasn’t been this low since Q1 of 2013. The better news is that a total of $27.2 billion was raised, which is more or less on par with previous quarters.
What’s Happening?
Venture capital stalwarts have noted that this lack of deals could be a blip on the radar.
“I’m not aware of any VC who pays attention to any quarter to quarter data at all,” Marc Andreessen, a prominent name in venture capital, noted in a Forbes piece.
That said, a sudden slowdown of this magnitude does raise questions. This is especially true given some of the market developments of 2015.
Firstly, this slowdown in venture capital deals has corresponded with the general anxiety and volatility occurring in public markets. Further, it’s also occurring on the heels of several less-than-stellar IPO performances and repeated calls of a tech valuation bubble. Lastly, while 2015 set records in terms of dollars spent in terms of funding, the amount of new capital raised by venture capital funds dipped significantly from 2014 levels.
This evidence would suggest that venture capital firms, as well as those that fund them, are becoming more discriminatory in how they spend their money.
Venture Capital in 2015: At a Glance
Where did venture capital money go to in 2015?
Here are some further charts from Raconteur that show the distribution behind the 100 biggest venture capital deals:
Top 100 Deals by Region
10 Largest Raises in Digital
Digital Deals by Sector
Click image to expand
Technology
Ranked: Largest Semiconductor Foundry Companies by Revenue
Most of the 10 largest semiconductor foundries in the world, are headquartered in just three Asian countries, accounting for 90% of the entire industry’s revenue.
Ranked: Largest Semiconductor Foundry Companies by Revenue
They’re in our phones, cars, planes, and even fridges.
Semiconductor chips have become critical for the modern way of life, and the biggest semiconductor foundry companies rake in billions of dollars from widespread demand.
This chart shows the largest semiconductor foundry companies by their percentage of global revenues in Q1 2023, using data sourced from Trendforce.
Semiconductor Foundry Companies by Revenue
At the top of the list and dwarfing every other company by revenue share is TSMC which earned 60% (or nearly $17 billion) of the entire industry’s revenue in Q1 2023.
Founded in 1987, TSMC is a pure-play foundry that has become Taiwan’s largest company and manufactures products for a host of clients including Apple, NVIDIA, and AMD.
| Rank | Company | Country | Revenue (Q1 2023, USD) |
|---|---|---|---|
| 1 | TSMC | 🇹🇼 Taiwan | $16,735M |
| 2 | Samsung | 🇰🇷 South Korea | $3,446M |
| 3 | GlobalFoundries | 🇺🇸 US | $1,841M |
| 4 | UMC | 🇹🇼 Taiwan | $1,784M |
| 5 | SMIC | 🇨🇳 China | $1,462M |
| 6 | HuaHong Group | 🇨🇳 China | $845M |
| 7 | Tower Semiconductor | 🇮🇱 Israel | $356M |
| 8 | PSMC | 🇹🇼 Taiwan | $332M |
| 9 | VIS | 🇹🇼 Taiwan | $269M |
| 10 | DB Hitek | 🇰🇷 South Korea | $234M |
| Other | $556M | ||
| Global Total | $27,860M |
Note: Revenue based on the following conversion rates: USD 1 = WON 1,276; USD 1 = NTD 30.4.
Well behind TSMC in foundry revenues is integrated device manufacturer Samsung, the biggest company in South Korea, which made $3.4 billion (12.4% of the industry’s revenue) from its semiconductor manufacturing business.
GlobalFoundries from the U.S., UMC from Taiwan and SMIC from China round out the top five, with each taking home around 6% of industry’s revenue share in Q1 2023. The former spun out from AMD’s manufacturing arm when the company went fabless in 2009.
Industry concentration is apparent in semiconductors. For example, the top 10 semiconductor foundry companies account for 98% of the entire industry’s revenue. Furthermore, 90% of the market is dominated by companies in just three Asian countries: Taiwan, South Korea, and China.
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